The Advertising of Installment Plans

Sharon Murphy

Volume 38 (1995)

After several decades of urbanization and industrialization, post- World War I America was marked by a rapid increase in the availability of mass-produced commodities. For the growing middle-class population, the twentieth century American dream had become based on the acquisition and consumption of this rising tide of commodities. 1 Economic historians like Martha Olney have described this period as a consumer durables revolution, characterized by an increase in both the average household expenditure for durable goods and the amount of installment credit issued to help pay for these goods.2

A critical precursor to this revolution was a transformation of the prevailing consumer attitudes towards incurring debt, and particularly a removal of the stigma against buying on installments. The idea of being in debt had always been looked down upon by the American public, yet the expansion of the market for consumer durables depended upon an increase in credit transactions.3The birth of the automobile installment finance company in 1919 provided the foundation for this transformation, creating a successful example of installment selling in a major industry.4

The catalyst to this change, however, lay not in the mere availability of installment credit but in the selling of the concept of debt through advertising. During the 1920s, businesses increasingly utilized advertising as a method not only to sell their products, but also as a means to convince the American public to buy on installments. Both the quantity and the quality of advertisements which mentioned installment plans rose significantly during this period, particularly in local publications. By 1929, these advertisements reflected the general acceptance of installment buying as a way to finance consumption and demonstrated that this shift in attitudes had reached its completion.

Installment buying is a specific method of purchasing goods on credit, distinct from other forms of credit such as loans or credit cards. Unlike a loan which entails a direct exchange of money from one party to another, these transactions always involve a transfer of wealth in the form of goods or services. A partial payment may be made at the time of the sale but full payment is deferred until some future date. In contrast with credit card purchases, an exact schedule of payments is enumerated at the time of the sale. The remainder owed is paid in specific quantities at successive intervals.5

Installment buying most commonly occurs in conjunction with the sale of durable goods. The Department of Commerce defines a durable good as any household product that can be used, on average, for three years or more.6 Durable goods are often divided by economists into major and minor durables. Major durables are goods “characterized by relatively long service lives, by the existence of commercial markets in which the services of similar assets [can] be purchased, and by unit costs high enough so that purchase with borrowed funds [is] a common method of acquisition.”7 Goods such as automobiles and automobile parts, furniture, household appliances, radios, phonographs, and pianos fall into this category. Minor durables are defined as all other durable goods, such as china and tableware, house furnishings, jewelry, books, maps, and some toys.8

Modern installment selling of durable goods was first introduced into the United States in 1807. In that year, a furniture store by the name of Cowperthwaite & Sons opened in New York City and immediately began offering installment terms to its customers. 9 Other large furniture stores in industrialized cities soon followed suit. All of these businesses used extreme care when deciding which customers could be extended installment credit, keeping defaults on payments rare.10

By 1850, the Singer Sewing Machine Company adopted this practice, which then spread to its competitors. Some abuses did arise at this time since purchasers of sewing machines tended to be less affluent than furniture customers and therefore defaulted on their payments more often. This fact did not, however, detract from the overall profitability of installment selling in this industry.11

The third business to begin selling on installments in the nineteenth century was the piano industry. This practice was a particularly attractive method of financing the sale of pianos since they were such an expensive commodity. An initial payment of one-third or more was often required and the ensuing monthly payments tended to be relatively large as well. Piano sales were thus restricted to the upper income levels of society and abuses were again rare.12

Overall, selling on installments was a very limited practice prior to the Civil War. It was confined primarily to goods which could be easily resold and the terms of payment tended to be rather stringent. It was a privilege enjoyed only by those customers with good credit histories and with income levels high enough to ensure the ability to meet the contract terms. As a business method, installment selling proved to be highly profitable for those retailers who chose to utilize it.13

At the end of the nineteenth century, however, retailers of lower grade commodities began to extend installment credit to lower income families who were higher credit risks. The practice became commonly used by the poorest families who began to buy the necessities required for everyday living on installments. This was particularly true in cities like New York where peddlers sold goods on installment to the rising tide of immigrants. Many of these peddlers took advantage of the immigrants by delivering products of much poorer quality than what was originally selected or by greatly overvaluing the goods. Although the idea of being in debt had always been looked down upon, it was at this time that the negative reputation of installment buying was intensified.14 No longer a privilege reserved for the upper classes, it became “symbolic of poverty, prodigality, [and] gullibility.”15

This was still the prevailing attitude towards installment buying in 1919 when General Motors created the General Motors Acceptance Corporation (GMAC), the first automobile installment finance company. This organization was originally developed in response to the large seasonal fluctuations which automobile sales experienced. Before closed cars became popular, automobile sales occurred primarily in the spring and summer. There were several months when assembly lines ran at full capacity, and then long periods when they were practically dormant and large numbers of workers had to be laid off. The car manufacturers wanted to remedy this problem by building up inventories during the slower months and then selling them off during the peak season. They expected this surplus to be stored by the individual dealers, but these dealers lacked the capital necessary to fund this storage. The solution to this problem came with the development of the sales finance company which provided the capital essential to maintain these inventories.16

Eventually, these companies expanded into automobile installment finance companies for middle and lower-middle class consumers. Without credit, a customer needed to save enough cash to cover the full price of the car. That was impossible for most Americans. As Olney noted, in order to purchase an automobile with cash during this time period, a typical American family would have to save for almost five years.17 With the spread of credit between 1919 and 1929, the percentage of households buying cars on installment more than tripled, rising from 4.9% to 15.2%.18 The creation of GMAC accounted for a large portion of this increase. In 1925, GMAC was three times larger than its nearest competitor, financing almost half of all installment purchases of automobiles that took place in that year. 19

With this dramatic increase in the installment selling of automobiles came the expansion of this technique into the markets for other major durable goods. According to credit expert Rolf Nugent, the success of automobile installment plans “tended to remove the stigma which installment selling had acquired at the hands of low-grade installment merchants in the 1890s.”20 In fact, credit was used in the purchases of up to 90% of major durable goods by the end of the 1920s.21 Average purchases of major durable goods rose from 3.7% of disposable income between 1898 and 1916 to 7.2% between 1922 and 1929. Accompanying this rise in purchases of durables was a drop in the personal savings rate, from 6.4% of disposable income in the former period to 3.8% in the latter.22

This rise in installment purchases of major durable goods was contingent on a fundamental transformation of consumer attitudes towards incurring debt. In a report commissioned in 1926 by the American Bankers Association, economist Milan Ayres commented, “During the nineteenth century the things that a self-respecting, thrifty American family would buy on the installment plan were a piano, a sewing machine, some expensive articles of furniture, and perhaps a set of books. People who made such purchases didn’t talk about them. Installment buying wasn’t considered quite respectable.”23 The change in the popular attitude towards installment buying which primarily occurred between the years 1922 and 1929 was therefore imperative to this revolution in consumer durables.24

Little research has been done on the question of how and why this change in popular perceptions of installment buying came about. Even Roland Marchand’s exhaustive work, Advertising the American Dream: Making Way for Modernity, 1920- 1940, refers only in passing to the “moral degenerancy of installment buying.” He makes no effort to explain how that sentiment was converted into a general acceptance of installment plans by the end of the 1920s.25

Scholars like Olney cite the increase in advertisements during this period as the main force behind the transformation of consumer attitudes. Olney credits advertising for expanding the desire for durable goods, a desire which the average household could only fulfill by paying in installments.26 Yet, she does not consider the ways in which advertising directly changed consumer attitudes towards installment buying. Relying on her study of the October issues of Ladies Home Journal from 1901-1941 as the sole basis of her argument, Olney concludes that “while households were using credit more and more often after World War I, manufacturers were no more aggressive in marketing their goods with credit; availability of credit terms is mentioned no more frequently in print advertisements of the 1920s than earlier.”27

Not all historians agree with Olney however. In fact, contemporary observers were very attuned to the important role played by the advertising of credit. W.L. Crick, a British historian of installment buying, stated in 1929 that “everyone must have noticed, from newspaper and other forms of advertising, the enormous spread of the scope of hire-purchase or deferred payment facilities.”28 Likewise, Wilbur Plummer and Ralph Young of the National Bureau of Economic Research commented in 1940 on the “aggressive selling campaign” undertaken by various industries which “specifically point[ed] out the ease of obtaining relatively expensive commodities by use of the deferred payment plan.”29

Two significant flaws in Olney’s research methodology account for the discrepency between her conclusions and the opinions of these contemporary historians. First, she based her study on advertisements from only one national magazine, yet she used this data to make assumptions about advertising in general. Second, Olney too readily dismissed the importance of the evidence that was found in these national magazines. The fact that these advertisements began to include the option of installment payments is significant in itself and must be analyzed with equal care.

It is primarily on the local level that advertisers use techniques such as installment buying to attract customers. In general, advertisements in national magazines are for specific brand-name items. The companies are trying to sell their particular product, which can be found in various stores across the country. Most of these companies do not sell directly to the customer, but sell to an intermediary such as a local automobile dealership or furniture store where the commodities are in daily competition with similar goods produced by other companies. The major problem faced by these national companies, therefore, is how to convince the customer to buy their brand-name refrigerator rather than the refrigerator standing right next to it, or why the customer should purchase one of their cars when a different brand can be bought at the car dealership up the street. On the local level, however, the services offered by a business to the customer become increasingly significant. It is in local publications that information such as the availability of installment plans is important. Thus, Olney’s fundamental error lies in her assumption that the advertising found in one national magazine accurately reflects the advertising found in all publications in general.

A close examination of the Richmond Times-Dispatch reveals that the availability of credit terms for major durable goods was increasingly mentioned in local advertisements of the 1920s.30The number of advertisements which mentioned installment plans more than tripled during this period, rising from nine in 1921 to 28 in 1929 (see figure 1). 31 Retailers were not only offering installment plans to their customers with increasing frequency, but they were also more willing to mention this possibility in local advertisements.

Although there was a significant increase in the overall number of advertisements for major durable goods during the 1920s, this fact alone does not explain the rising frequency with which installment plans were mentioned. By examining these advertisements as a percentage of all advertisements for major durable goods, it is clear that other factors must have influenced this increase. From a low of 17% in 1920, the percentage climbed almost continuously over the next decade, comprising 64% of advertisements by 1929 (see figure 2). This rise can be attributed to the gradual softening of consumer attitudes towards incurring debt. With people more receptive to the idea of buying on installments, retailers were more willing to offer installment plans and to advertise this possibility to the public.

The number of advertisements which mentioned installment plans did not really begin to increase until about 1922. Although GMAC had been created in 1919, the change in the popular perception of installment buying was initially very gradual since many customers still remained wary of making purchases on credit. By 1922, however, the overwhelming success of installment buying in the automobile industry began to attract manufacturers and dealers of other major durable goods. A boost was given to installment sales of furniture, pianos and sewing machines, but a major portion of the increase in installment selling can be traced to new products just entering the market or older products which had previously avoided offering installment plans. These goods included phonographs, washing machines, electric refrigerators, vacuum cleaners, and radio sets.32 This rise in installment sales was reflected in the steady increase in advertisements which mentioned the availability of installment plans, especially after 1922, as figures 1 and 2 clearly demonstrate.

Although there was an overall rise in advertisements mentioning the availability of installment plans, this increase occurred at different rates for different commodities. Since the creation of the automobile installment finance company was the precursor to the transformation of consumer attitudes, it is useful to compare advertisements for automobiles which mention installment plans with those for other major durable goods (see figure 3). When these advertisements are examined as a percentage of total advertisements for major durable goods, it is evident that a more rapid increase occurred in the advertisements which mention installment plans for major durable goods other than automobiles. This percentage jumped from a low of 17% in 1920 to 40% in 1923, reaching 45% by 1929 (see figure 4). In contrast, only 10% of automobile advertisements in 1922 mention installment plans, rising to a mere 18% by the end of the decade. Despite the fact that installment selling in the automobile industry set the precedent for retailers of other major durable goods, few businessmen in this industry ever used installment plans as a marketing tool.33 It was primarily the advertising of these other products that influenced and transformed consumer attitudes.

Although it is clear that the number of advertisements which mentioned installment plans was increasing, the question of whether the mere advertising of credit played a pivotal role in the transformation of consumer attitudes still needs to be explored. To analyze that phenomenon, it is necessary to examine the contents of the advertisements themselves in order to see how they were used by retailers to alter public opinion.

There were several ways in which advertisements during the 1920s tried to sell the idea of installment buying to the American public. One way was to appeal to the traditional sentiments that had originally made installment buying unattractive. An advertisement in 1920 for a New Edison phonograph called its budget plan “a real thrift idea. It helps you purchase your New Edison without paying spot cash and without increasing your monthly allowance for enjoyment.”34 A similar advertisement for Pettit and Company furniture stores stated, “Buying home furnishings on credit at Pettit’s is a thrifty habit. The easy weekly installments are like savings put in the bank, that pay big dividends in happiness and service.”35 Thus, these advertisements tried to show that there was no contradiction between incurring debt and the time-honored American virtue of thrift.

Advertisers also endeavored to elevate the reputation of installment buying in other ways. Several businesses used the adjective “dignified” to describe their installment plans and one furniture company even called itself “The House of Dignified Credit.” Other advertisements went even further by attempting to convince the purchasers that they would actually save money by buying on installments. Bloomberg-Michael Furniture Company said that its “plans enables you to save at least 25% in your purchase and gives you the benefit of extended time.” This advertisement did not, however, explain exactly how installment buying would save the consumer money.36

Equating installment buying with thrify ideals softened popular fears of the practice. By incorporating the traditional economic values of the average, middle class American into their descriptions of installment plans, advertisers depicted installment buying as a practice which aided consumers in their attempts to make frugal purchases. Paying in installments was characterized as the modern equivalent of saving money in the bank. By placing installment buying in a traditional context, advertisers helped consumers adjust to the notion of paying a small down payment with the remainder to be paid in easy weekly or monthly installments.

Advertisers also tried to convince consumers of the affordability of buying a product on installments. One way retailers did this was to simply describe the terms as “easy to afford” or no “strain on your income.” Other companies advertised that the customer would “barely miss the money” or could pay on “deferred payments you’ll never miss.” Some of the more creative companies even said that the customer could “pay the balance like rent, at a rate of only a few pennies a day.”37

All of these phrases again appealed to the customer’s sense of frugality. The advertisers gave the impression that the money needed to meet the weekly payments was loose change which could be scraped up from under a sofa cushion or from the bottom of a pocketbook. They implied that the customer would never have to worry about not having enough money to meet the payments, and therefore would never be embarrassed by having the products repossessed. These advertising strategies helped to transform consumer attitudes by convincing the buyer that paying in installments would not effect his or her financial situation adversely in the long run.

Advertisers also emphasized the convenience of buying on time. As many advertisements explained, the consumer could use the product while it was still being paid for, rather than having to save over several years and being deprived of current enjoyment. These advertisements introduced and played on new ideas of leisure and pleasure. They encouraged customers to “ride as you pay” or “play as you pay.” For just “a small amount down” you could “get want you want now.” Rather than waiting to buy a new refrigerator or baby carraige, retailers “are making it easy to get these things, right now when you need them.” 38 These advertisements played upon the rising consumption ethic by which Americans increasingly desired to buy goods immediately rather than postponing their purchases until enough money had accumulated in the bank. Customers were told that they should not wait to obtain the commodities they desired, nor did they have to wait any longer. The availability of installment plans made it possible for them to fulfill these desires almost instantly.

Businesses also attempted to make it convenient for customers by emphasizing that they were flexible in the terms they offered. Most of these companies advertised that their products could be purchased with “payments that will suit your savings and income.” One piano company actually used half of the advertisement in order to stress the fact that terms “will be arranged to suit you…we have no set terms.”39 These advertisements used very consumer-oriented language to imply that retailers were willing to arrange terms that personally suited the needs of each consumer. This served to transform the popular perception of installment buying by suggesting that the purchaser was in control of the process. Consumers could both enjoy the product now and also dictate the terms by which they would make full payment for it.

Eventually retailers simply came to assume that customers preferred to pay in installments. They primarily advertised the terms of payment, with the full price either being placed in a subordinate position to these terms or being omitted altogether. An excellent example of this was a furniture advertisement which stated that the customer could “choose any range $5.00 down or your old stove as your first payment.”40 The full price of the product was not even mentioned in this advertisement, nor could it be ascertained from the information given.

By implying that the customer did not have the option of paying for the product in cash, these advertisements created the image of a modern culture in which everyone was buying on installments. By insinuating that the average American was now paying for the conveniences of modern life on installments, these advertisements served to change the perceptions of the general public towards this practice. Whereas in the past the prevailing attitude was that only the impoverished or the gullible made purchases on installments, advertisements like these suggested that this had become the only way to make purchases. It became an accepted part of American culture in which Americans did not need to feel ashamed to participate.

Although these techniques clearly demonstrate the ways advertisers attempted to shape public opinion, they alone were not enough to transform consumer attitudes towards installment buying. These methods had to occur in conjunction with an increase in the use of installment plans as a selling point of these advertisements. For the purposes of this study, advertisements which mentioned installment plans were divided up into two categories, those that did not use the availability of installment plans as a selling point and those that did.

The first category included advertisements which did not use the possibility of buying on installments as a selling point to attract customers. The availability of this form of credit was either mentioned in small print or was included as part of the descriptive paragraph for the product. Therefore, some other aspect of the advertisement

was intended to attract and then hold the attention of the reader long enough to peruse the entire advertisement, including the fine print. Figure 5 provides one example of an advertisement in which the availability of an installment plan is not a selling point used by the retailer.41 Potential customers had to wade through several paragraphs of text, and then continue reading with a magnifying glass to the end of the fine print before they were told, “Plymouth dealers are in a position to extend the convenience of time payments.”

The second group consisted of all other advertisements which mentioned installment plans. Since this category included a wide variation in the degree to which installment plans were mentioned, it was again divided into two subgroups. The first subgroup consisted of advertisements in which installment plans were used only as a secondary selling point. The advertiser still relied on some other device to originally attract the reader to the advertisement, but the possibility of paying in installments was one of the points raised in order to maintain the interest of the reader. Figure 6 is one example of an advertisement in which the installment plan was only one selling point among many.42

The second subgroup consisted of those advertisements which used the option of buying on installments as the principle way in which to attract the reader. The installment plan was often mentioned in large bold letters that caught the eye of the potential customer. Also, in general, at least half of the advertisement was devoted to convincing the reader to buy the product on installments. Figure 7 is a good example of an advertisement that used the possibility of buying on time as a major selling point.43

During the 1920s, the number of advertisements which included the availability of installment plans as a selling point for the product was generally increasing, and once again this trend primarily began around 1922 (see figure 8). By analyzing this data in conjunction with the overall increase in advertisements that mentioned the possibility of paying in installments and the suggestive wording retailers used throughout the decade, it is clear that retailers were indeed much more aggressive in marketing their goods with credit. Yet in keeping with a smart marketing strategy, they chose to do this primarily in local publications and not in national magazines.

Not only did the advertising of installment plans in local publications become increasingly prevalent, but also the advertisements in national magazines began to reflect a change in consumer attitudes towards installment buying. By 1929, these advertisements effectively demonstrated that this general acceptance of credit as a means of financing consumption had reached its completion.44

In contrast to local publications, the number of advertisements in national magazines which mentioned installment plans remained static during this time period and the few advertisements which did cite the availability of installment plans generally did not use this fact as a selling point. The availability of credit was usually mentioned in small print or as part of the descriptive paragraph. What is significant to note, however, is the evolution of the wording of these advertisements between 1919 and 1929. This change in word choice clearly reflects the transformation in consumer attitudes towards buying on installments which occurred during this period.

Prior to the 1920s, the sales techniques used by retailers only served to reinforce the negative attitudes customers had towards buying on installments. As leading credit expert Rolf Nugent stated in 1939, “It had been the practice of most dealers who were willing to accept installment payments to assume that each prospective purchaser was a cash or charge-account customer, and an installment buyer was compelled, frequently to his embarrassment, to request deferred-payment terms.”45

Not surprisingly, this assumption on the part of salesmen spilled over into the advertising of the period. The few advertisements that actually mentioned the presence of installment plans did so in language which revealed the negative sentiments commonly felt towards this practice. The advertisements generally made such statements as “installment payments allowed,” “time payments if desired,” “terms may be arranged,” or “monthly payments if desired.” 46

These phrases all have connotations which implied that customers who wished to buy on installment plans were somehow inferior to those who payed in cash. The choice of the word “allowed” suggested that the customer had to ask permission to pay in installments from someone superior. Likewise, the phrase “terms may be arranged” implied a request that needed to be granted. The customer was left wondering if they should ask to pay in installments and risk the embarrassment of possibly being rejected.

All of these phrases depicted installment buying as a practice which deviated from the more respectable norms of society. As rigid statements which merely indicated the availability of installment plans, they said nothing to invite the reader to take advantage of them. They did, however, serve as a very accurate reflection of how the American public as a whole viewed the idea of paying in installments in the early 1920s.

As the decade progressed, there was a gradual change in the attitudes of customers and salesmen alike. Again Nugent commented, “In the 1920s it became common practice for dealers in durable household goods to assume that each prospective purchaser was a deferred-payment customer. Thus, the installment buyer was saved from possible embarrassment.”47 This change in attitudes again affected the wording found in national magazine advertisements. Even though installment plans were still mentioned only in small print or as part of the descriptive paragraph, the wording by the mid-1920s was much less pejorative. A statement such as “All dealers are in position to extend the convenience of time-payments. Ask about Chrysler’s attractive plan” was common at this time. Even though this statement still implied that the customer needed to ask permission to pay in installments, words such as “convenience” and “attractive” placed the installment plan in a positive light and invited the customer to take advantage of this opportunity. It was no longer considered an embarrassment for the customer to inquire about this option.48

Some advertisements made even more explicit attempts to alleviate the embarrassment of asking about terms. One example was an automobile advertisement which stated, “Packard dealers will be glad to explain the Packard monthly-payment plan which is available to purchasers.”49 This statement suggested a happy, smiling dealer whose primary job was to explain installment terms to eager customers. Also, the use of the word “available” was much less severe than a word like “allowed” found in earlier advertisements.

The availability of installment plans as a means of appealing to customers could be found in automobile advertisements of all price categories by this time. It was mentioned in advertisements ranging from a Dodge Brothers Special Type-A Sedan to a Cadillac or a Rolls-Royce. These advertisements utilized various phrases such as “a moderate initial payment” with “the balance…conveniently distributed,” or “the most economical way of buying a Cadillac on time” in order to create the image of buying on installments as a thrifty practice. 50

By far the most illustrative advertisement of this period, however, was one which absolutely glorified installment buying, particularly in relationship to GMAC. This advertisement, found in figure 9, depicted a treasury chest sitting on top of the world. The chest was filled with bound credit contracts which were being dropped from the heavens. Flying from this chest out over America were angelic winged coins which represented the purchasing power gained by the consumer when goods were purchased on an installment plan. In big, bold letters at the top it stated, “Cars on Credit.” This advertisement celebrated both the success enjoyed by GMAC between 1919 and 1925, and the success of installment plans in general as a gift to consumers from the heavens. It reflected an obvious change in consumer attitudes. Advertisers just a few years earlier would have been afraid of offending potential customers with such an ostentatious display. By 1925, however, the public perception of installment buying had changed to such an extent that an advertisement like this one could be used actually to attract customers.51

By the end of the decade, the wholly positive portrayals of installment plans reflected the complete transformation in consumer attitudes. Words like “convenient,” “low-cost,” and “easy” continued to be used in the descriptions of payment plans. Additionally, the image of joyful dealers who “welcome business on the General Motors deferred payment plan” was still a common sight.52 Advertisements of this time period went one step further, however, demonstrating that buying on installments had become a permanent aspect of the twentieth- century American dream.

One of the most telling examples of an advertisement which fully reflected the completion of this transformation in consumer attitudes was a LaSalle automobile advertisement from a 1928 issue of Good Housekeeping. In mentioning the available installment plan it poignantly stated, “If you prefer to buy out of income, as nearly everyone does today, the General Motors plan is very liberal.”53 At this point, the journey from a world in which customers were expected to pay with cash and were discouraged from buying on installments, to a world in which salesmen actually encouraged the use of installment plans was complete. Customers who made purchases on installments were no longer depicted as a minority group deviating from the normal course of action. It was now the people who insisted on paying in cash who seemed overly traditional and backward looking. As historian Frederick Lewis Allen commented in 1931, “People were getting to consider it old-fashioned to limit their purchases to the amount of their cash balances.”54

By the end of the 1920s, installment plans had become the primary way for a middle-class family to attain a piece of the American dream. People who had formerly shied away from acquiring debt now accepted installment buying as a means to finance modern consumption. This transformation in consumer attitudes resulted from a gradual change in the depiction of installment buying in advertisements. Retailers increasingly utilized this medium in order to convince consumers to buy on installments, both influencing and reflecting popular perceptions of this practice. By the eve of the Great Depression, they had intimately linked installment buying to the attainment of the American dream, a legacy which remains with us even as the twentieth-century draws to a close.




Year Total Ads Ads for Major Durable Goods Auto Ads Mentioning Installment Plans Other Ads Mentioning Installment Plans
1915 22 7 0 7
27 6 0 6
1917 40 7 0 7
1918 52 11 0 11
1919 41 9 0 9
1920 54 9 0 9
1921 29 9 1 8
1922 31 14 3 11
1923 30 14 2 12
1924 47 17 2 15
1925 41 18 4 14
1926 45 20 4 16
1927 47 21 4 17
1928 38 23 6 17
1929 44 28 8 20


Year Installment Plans Used as Selling Points Installment Plans Used as Secondary Selling Points Installment Plans used as Primary Selling Point
1915 2 2 0
1916 2 2 0
1917 1 1 0
1918 6 6 0
1919 4 3 1
1920 5 3 2
1921 4 3 1
1922 6 4 2
1923 10 9 1
1924 12 9 3
1925 8 5 3
1926 10 5 5
1927 21 7 3
1928 14 10 4
1929 14 9 5

Data collected from the Richmond Times-Dispatch,April 4, 1915, April 2, 1916, April 1, 1917, April 7, 1918, April 6, 1919, April 4, 1920, April 3, 1921, April 2, 1922, April 1, 1923, April 6, 1924, April 5, 1925, April 4, 1926, April 3, 1927, April 1, 1928 and April 7, 1929.







1 William Leach, Land of Desire (New York: Pantheon Books, 1993), p. 3.

2 Martha L. Olney, Buy Now Pay Later (Chapel Hill: University of North Carolina Press, 1991), p. 1.

3 W.F. Crick, The Economics of Installment Trading and Hire- Purchase (London: Sir Isaac Pitman & Sons, Ltd., 1929), p. 7.

4 E.R.A. Seligman, The Economics of Installment Selling (New York: Harper & Brothers Publishers, 1927), p. 48.

5 Rolf Nugent, Consumer Credit and Economic Stability (New York: Russell Sage Foundation, 1939), pp. 54-5 and Seligman, p. 2.

6 Olney, p. 6.

7 Thomas F. Juster, Household Capital Formation and Financing: 1897-1962, 1966 as reprinted in Martha L. Olney, Buy Now Pay Later (Chapel Hill: University of North Carolina Press, 1991), p. 7.

8 Olney, p. 8.

9 Although the exact origin of this practice is unknown, E. R. A. Seligman suggest that Cowperthwaite & Sons received the idea from a lady who had just returned from Paris, where it had been a popular selling technique at some upper class establishments. Seligman, p. 14.

10 Evans Clark, Financing the Consumer (New York: Harper and Brothers Publishers, 1933), p. 19, Nugent, p. 54 and Seligman, pp.14-16.

11 Clark, p. 19, Nugent p. 55, and Seligman pp. 16- 17.

12 Clark, p. 19, Nugent, p. 55, and Seligman, pp. 17- 18.

13 Nugent, pp. 55-6 and Seligman, pp. 18-19.

14 Nugent, pp. 67-8 and Seligman, pp. 19-22.

15 Nugent, p. 96.

16 Harold Emerson Wright, The Financing of Automobile Installment Sales (Chicage: A.W. Shaw Company, 1927), pp. 14-5, Lawrence H. Seltzer, A Financial History of the American Automobile Industry (Boston: Houghton Mifflin Company, 1928), pp. 53-4, Seligman, pp. 29-32 and Olney, pp. 119-126.

17 Seligman, p. 28 and Olney, p. 105.

18 Olney, p. 96.

19 Seligman, p. 23.

20 Nugent, p. 96.

21 Olney, p. 3.

22 Olney, p. 48. Disposable income is the amount of money a household has available for spending or saving after taxes have been removed.

23 Milan V. Ayres, Installment Selling and Its Financing, May 1926 as reprinted in Martha L. Olney, Buy Now Pay Later (Chapel Hill: University of North Carolina Press, 1991), pp. 130-131.

24 Charles O. Hardy, ed., Consumer Credit and Its Uses, 1938 as reprinted in Marth L. Olney, Buy Now Pay Later (Chapel Hill: University of North Carolina Press, 1991), p. 131.

25 Roland Marchand, Advertising the American Dream: Making Way for Modernity, 1920-1940 (Berkeley: University of California Press, 1985), pp. 157-8.

26 Olney, pp. 180-181.

27 Olney, p. 135.

28 Crick, p. 4.

29 Wilbur C. Plummer and Ralph A. Young, Sales Finance Companies and Their Credit Practices (New York: National Bureau of Economic Research, 1940), p. 75.

30 Data was collected from the Richmond Times- Dispatch for the years 1915 to 1929 from the first Sunday issues in the month of April. The dates of these issues are April 4, 1915, April 2, 1916, April 1, 1917, April 7, 1918, April 6, 1919, April 4, 1920, April 3, 1921, April 2, 1922, April 1, 1923, April 6, 1924, April 5, 1925, April 4, 1926, April 3, 1927, April 1, 1928 and April 7, 1929. The data collected can be found in the appendix. This data was used to create all graphs cited in this study. Most automobile sales occurred between the months of March and October. April was therefore picked as a period early in this peak season when advertisements for automobiles would probably be most prevalent. See Olney, pp. 121-24 for more information on this trend in sales.

31 In his book on installment selling, E.R.A. Seligman listed numerous terms which were used by businesses or consumers to indicate the availability of an installment plan. These terms include credit merchandising, deferred payments, times sales, installment buying, partial payments, hire- purchase, payments out of income, contract selling, easy payments, credit buying, part payments, installment purchase and ten-payment plan. See Seligman, p.1.

32 Seligman, p. 51.

33 Although the data from the Richmond Times- Dispatch supports the conclusion that the automobile industry rarely used the availability of installment plans as a marketing tool, this study could not find any reason for this phenomenon. It is possible that the automobile industry did not realize the sales potential of selling on installments as quickly as other industries did, and it is also possible that the automobile industry consciously avoided trying to attract customers in this manner. This particular question, however, is beyond the scope of this study.

34 Richmond Times-Dispatch, April 4, 1920, p.3, sec, I.

35 Richmond Times-Dispatch, April 4, 1920, p. 5, sec. III.

36 Richmond Times-Dispatch, April 7, 1918, p. 13, sec. I, April 3, 1927, p. 4, sec. II, April 1, 1928, p. 4, sec. I, and April 7, 1929, p. 12, sec. I.

37 Richmond Times-Dispatch, April 6, 1924, p. 2, sec. I, April 2, 1916, p. 13, sec. I, April 6, 1924, p. 5, sec. III, April 1, 1923, p. 12, sec. I, April 6, 1919, p. 7, sec. III, April 4, 1926, p. 18, sec. I, April 5, 1925, p. 2, sec. III, and April 5, 1925, p. 2, sec. I.

38 Richmond Times-Dispatch, April 1, 1928, p. 6, sec. II, April 6, 1924, p. 10, sec. II, April 1, 1923, p. 5, sec. III, April 2, 1922, p. 18, sec. I, and April 2, 1922, p. 3, sec. III.

39 Richmond Times-Dispatch, April 1, 1923, p. 12, sec. II, April 4, 1915, p. 7, sec. IV, and April 7, 1918, p. 10, sec. I.

40 Richmond Times-Dispatch, April 6, 1924, p. 12, sec. IV.

41 Richmond Times-Dispatch, April 7, 1929, p. 11, sec. II.

42 Richmond Times-Dispatch, April 7, 1929, p. 10, sec. I.

43 Richmond Times-Dispatch, April 3, 1927, p. 11, sec. I.

44 The issues of Time included April 14, 21, 28, 1923, December 17, 24, 31, 1923, December 8, 15, 22, 29, 1924, April 6, 13, 20, 27, 1925, December 7, 14, 28, 1925, April 5, 12, 19, 26, 1926, December 13, 20, 27, 1926, April 4, 11, 18, 25, 1927, December 5, 12, 19, 26, 1927, April 2, 9, 16, 23, 1928, December 3, 10, 17, 24, 31, 1928, and April 1, 8, 15, 22, 29, 1929. The issues of Good Housekeeping included April 1919, December 1919, April 1920, December 1920, April 1921, December 1921, April 1922, December 1922, April 1923, December 1923, April 1924, December 1924, April 1925, December 1925, April 1926, December 1926, April 1927, December 1927, April 1928, December 1928, and April 1929. The issues of The American Magazine included April 1919, December 1919, April 1920, December 1920, April 1921, December 1921, April 1922, December 1922, and April 1929.

45 Nugent, p. 96.

46 Quotes were taken in order of appearance from Richmond Times- Dispatch, April 6, 1919, p. 6, sec. III, The American Magazine, April 1920, p. 136, Richmond Times-Dispatch, April 7, 1918, p. 2, sec. I, and The American Magazine, April 1919, p. 160.

47 Nugent, p. 96.

48 Time, April 12, 1926, p. 1.

49 Time, December 28, 1925, p. 4.

50 Good Housekeeping, December 1925, p. 142, Time, December 8, 1924, inside cover, and Good Housekeeping, December 1925, p. 97.

51 Time, April 6, 1925, p. 27.

52 Good Housekeeping, April 1929, p. 173, Time, April 11, 1927, p. 7, and Good Housekeeping, April 1929, p. 121.

53 Good Housekeeping, April 1928, p. 154.

54 Frederick Lewis Allen, Only Yesterday: An Informal History of the 1920’s, 1931 as reprinted in Martha L. Olney, Buy Now Pay Later (Chapel Hill: University of North Carolina Press, 1991), p. 131.

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